Cash deposit during demonization out of sale and debtor realization not unexplained u/s 69A: ITAT

The assessee belongs to group cases of M/s Roop Square Group of Companies and had declared an income of Rs. 2,35,350 under the Income Head of Business & Profession in its return of income filed under section 139 of the Act. The AO during the course of assessment proceedings noticed that the assessee had deposited demonetized currency in its bank account and on questioning failed to give a satisfactory explanation about the nature and source of such cash deposits. Hence, the AO made an addition of Rs. 97,50,000 u/s 69A of the Income Tax Act, 1961. The total Income assessed was to be taxed u/s 115 BBE of the Act at the rate of 60%.

Appeal before CIT(A): Being aggrieved the assessee carried the matter to the Ld. CIT(A), which deleted the addition made by AO saying no bogus sales were proved by AO.

Appeal before ITAT: Aggrieved the revenue and filed an appeal before the tribunal. The tribunal observed that the AO did not point out any specific defect in the books of account maintained by the assessee, no inflated purchases or suppressed sales were found.

Therefore, the addition of Rs. 97,50,000 made by the AO on the basis of surmises and conjectures was rightly deleted by the Ld. CIT(A). We do not see any valid ground to interfere with the detailed and logical findings given by the order of Ld. CIT(A).

As regards the Cross Objection filed by the assessee the tribunal observed that since it had already confirmed the order of the Ld. CIT(A) in deleting the addition made by the AO on merit, therefore Cross Objection was treated as allowed while no findings are being given on the legal issues raised by the assessee in this cross objection. Therefore, the appeal of the Department was dismissed and the Cross Objection of the Assessee was partly allowed.